Democratic Party Accelerates Application of Loss Compensation Act Starting July

Proposed on the 25th, Legislation Next Month, Detailed Provisions to Be Set by Enforcement Decree

[Asia Economy Reporter Park Cheol-eung] The Democratic Party of Korea has set a plan to pass the COVID-19 Loss Compensation Act next month, create enforcement ordinances over three months, and apply them starting from July. The results of related research commissioned by the Ministry of Economy and Finance will be considered during the enforcement ordinance discussion phase. While the Ministry of Economy and Finance takes a cautious stance, the Democratic Party believes that speed should be maximized.

Hong Ik-pyo, chairman of the Democratic Party's Policy Committee, said in a phone interview with Asia Economy on the 23rd, "First, we are preparing to propose a bill on the 25th to establish a legal basis for loss compensation and support by amending existing laws," adding, "The specific support details will be included in the enforcement ordinance, and if compressed into about three months, it can be finalized within the first half of the year and applied in July."

The loss compensation system has been proposed in three forms: amendments to the Infectious Disease Control and Prevention Act, amendments to the Small Business Protection Act, and a separate special law. The Democratic Party is focusing on amending the Small Business Protection Act.

The Ministry of Economy and Finance does not oppose the legislation of loss compensation itself but points out practical difficulties such as measuring losses. Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, appeared before the National Assembly on the 16th and said that a pan-government task force (TF) is operating and research is underway, stating, "Typically, research takes six months, but we have requested several affiliated institutions to submit their research by the end of March at the earliest." The government plan could be submitted as early as April.

The Democratic Party plans to speed up the process by legislating first and including detailed content in the enforcement ordinance. Hong said, "If we follow the government's plan, the implementation of the loss compensation system will be delayed until the latter half of the year. That is very complacent," adding, "This is also why the party's Policy Committee is pushing forward instead of leaving it to the government."

In the bill proposed by Democratic Party lawmaker Min Byung-duk, the core is to compensate up to 70% of sales losses for businesses subject to gathering bans, and 50-60% for other affected industries. From the People Power Party, senior lawmaker Kwon Young-se proposed compensating at least 50% of sales losses for businesses under gathering bans and at least 30% for businesses under gathering restrictions.

The Democratic Party will also propose the Win-Win Solidarity Fund bill on the 25th. On the 9th, Democratic Party leader Lee Nak-yeon said, "The cooperation profit-sharing system is not as active as desired," and suggested, "The current 10% corporate tax deduction rate on contributions should be increased to at least '20% plus alpha (α)' as an incentive." Hong said, "We will provide stepped tax credit support based on the amount of contributions or donations, and as Leader Lee mentioned, we will try to raise it to a maximum of around 20%."

Meanwhile, Hong appeared on KBS Radio that day and commented on the 4th disaster relief fund budget, saying, "I think the figure will be around 20 trillion won," and added, "Since it includes already confirmed budgets, the actual supplementary budget size may be smaller than that."

The plan also includes applying support to special-type workers (teukho), freelancers, and platform workers, and reflects free provision of COVID-19 vaccines and treatments. The support criteria for small business owners are being positively reviewed to broadly cover those with sales under 1 billion won.

This content was produced with the assistance of AI translation services.